Industry experts battle proposed mortgage interest deduction changes

Industry leaders are riled over a federal proposal to overhaul the mortgage interest tax deduction, according to CNNMoney. The deduction, which allows homeowners to deduct interest on their mortgages of as much as $1 million, would be curtailed under the proposal, brought forward by the presidential deficit commission (see CNBC video on the proposal above). Among the changes would be a $500,000 mortgage cap and a 12 percent non-refundable tax credit made available to all. The panel, which has been tasked with reducing the national deficit by $4 trillion over the next decade, said that the tax deduction could be siphoning too much cash out of federal coffers. But Michael Berman, chairman of the Mortgage Bankers Association, said that the deduction, which costs an estimated $131 billion a year, is necessary to keep the housing market’s recovery rolling. “It would immediately stop in its tracks any stabilization we are seeing in the housing market and would effectively increase the cost of homeownership for millions upon millions of people,” Berman said of the panel’s curtailed deduction plan. [CNNMoney]